Ulaanbaatar Urban Services and Ger Areas Development Investment Program

Transcription

1 EA Progress Report Project Number: Loan: 3099-MON Period covered October December 2016 Mid Term Review (February 2016) Ulaanbaatar Urban Services and Ger Areas Development Investment Program QUARTERLY PROGRESS REPORT AND Mid Term Review 24 February 2017 Prepared Jointly by: Municipality of Ulaanbaatar (MUB), Project Management Office (PMO) and Project Management Support Consultants (Egis) for submission to ADB 1

2 DOCUMENT QUALITY INFORMATION General information Author(s) PMO and PMSS Consultant Egis Teams Projects names Ulaanbaatar Urban Services and Ger Areas Development Investment Program Financing: ADB MFF 0078/Loan 3099-MON(SF) Document name DRAFT QUARTERLY PROGRESS AND MID-TERM REVIEW REPORT Date 24 February 2017 Addressee(s) Sent to: Name Organization Sent on (date): Mr. Arnaud Heckmann ADB 2016 Mr. Bathkuu MUB 2016 Mr. Avirmed PMO 2016 Copy to: Name Organization Sent on (date): Mr. Oliver Flury Egis International 2016 History of modifications Version Date Written by Approved by 1 24 February 2017 CS2 Egis Team Egis 2 Acronyms and Abbreviations ADB Asian Development Bank EA Executing Agency EMP Environment Management Plan IEE Initial Environmental Examination RP Resettlement Plan GAP Gender Action Plan GRM Grievance Redress Mechanism PMO Project Management Office SAP Social Action Plan SPS Safeguard Policy Statement TOR Terms of Reference NCB National Competitive on Bidding ICB International Competitive Bidding 2

3 CONTENTS CONTENTS 3 ABBREVIATIONS 5 PREAMBLE 6 EXECUTIVE SUMMARY 8 PROJECT LOCATION MAP 10 Project Management Arrangements 11 A. Project Implementation Organizations Roles and Responsibilities 11 B. Key Persons Involved in Implementation 12 C. Project Organization Structure 13 A. The Project 16 A.1 Background 16 A.2 Project Impact and Outcome 17 A.3 Project Outcome 19 B. Project Implementation Status 21 B.1 Updated Project Implementation Schedule 21 B.2 Performance Monitoring System (PPMS) 21 C. Project Management Information System (MIS) 24 D. Procurement 25 D.2 Updated and Revised Procurement Plan 25 E. Contract Management 28 E.1 Bayankhoshuu Subcenter Subproject 28 E.2 Selbe Subcenter Subproject 28 E.3 Water and Wastewater Operation Improvement Subproject 28 E.4 Consulting Services Packages 28 F. Financial Management and Project Accountings 29 F.1 Financial Management System and Support 29 F.2 Project Costs 29 F.3 Project Financing and Disbursements 30 G. Safeguards 35 G.1 Update of EMP, RPs, SAP and GAP 35 G.1.1 Update of EMP 35 G.1.2 Update of RPs 36 G.1.3 Update of SAP and GAP 37 G.2. Environmental Monitoring 38 G.3. Safeguards Implementation Support and Monitoring 38 3

4 G.4. Safeguards Implementation Support and Monitoring 39 G.5 Social and Gender Consultations 39 G.6 Grievance Redress Mechanism (GRM) and Reporting 40 H. Capacity Building and Training 41 H.1 Institutional Support 41 H.2 Training Plan 42 H.3 Training Activities 42 I. Key Activities for Next Quarter 44 Current Work in Progress: 44 List of documentation available 44 J. Conclusions, Issues and Recommendations 46 APPENDIXES 52 Appendix 1a: Design and Monitoring Framework for the Investment Program 53 Appendix 1b: PPMS Performance Indicators and Baseline 54 Appendix 1c: Indicator Definition Table (IDT) Feb Appendix 2: Procurement Plan Contract Packaging 56 Appendix 3: Updated Project Implementation Schedule 57 Appendix 4: Record of Meetings and Training Schedule 58 Appendix 5: Consultants Quarterly Progress Reports 59 Appendix 6: Status of Tranche 1 Compliance with Loan Covenants 60 Appendix 7: Tranche 2 Signed MOU 62 4

5 ABBREVIATIONS ADB = Asian Development Bank ADF = Asian Development Fund CQS = consultant qualification selection DEIA = detailed environmental impact assessment DMF = design and monitoring framework EARF = environmental assessment and review framework EIA = environmental impact assessment EMP = environmental management plan ESMS = environmental and social management system FFA = framework financing agreement FAM = facility administration manual GACAP = governance and anticorruption action plan GDP = gross domestic product GEIA = general environmental impact assessment GRM = grievance redress mechanism ICB = international competitive bidding IEE = initial environmental examination LAR = land acquisition and resettlement MEGD = Ministry of Environment and Green Development MFF = multitranche financing facility MOU = Memorandum of Understanding MUB = Municipality of Ulaanbaatar NCB = national competitive bidding NGOs = nongovernment organizations PAI = project administration instructions PIU = project implementation unit PMO = program management office PSC = program steering committee QCBS = quality- and cost-based selection RPIC = Resettlement Planning Implementation Committee RRP = report and recommendation of the President to the Board SAP = social action plan SBD = standard bidding documents SME = small and medium enterprise SOE = statement of expenditure SPRSS = summary poverty reduction and social strategy SRA = Subcenter Redevelopment Authority USUG = Ulaanbaatar Water Supply and Sewerage Authority Weights and Measures km = kilometer m = meter m2 = square meter mm = millimeter MW = megawatt NOTE In this report, "$" refers to US dollars. 5

6 PREAMBLE The program approach aims to initiate a redevelopment process in ger areas. Improving infrastructure within the ger area subcenters and connectivity with the city core center is critical for inclusiveness and important to facilitate the movement of people and goods, develop urban corridors, and create clusters of subcenters. Better urban planning combined with a network of infrastructure along priority roads will initiate a structural change of subcenter urban fabric. This will (i) improve residents access to basic urban services, public space, and socioeconomic facilities; (ii) support local economic development; (iii) allow residents and businesses to take advantage of urban economies; and (iv) provide better housing options. The changes in land use and higher urban density will improve water, sanitation, and heating services delivery. Road map. Based on government and Municipality of Ulaanbaatar (MUB) priorities to redevelop ger areas, the road map for the program will support the MUB in establishing a network of well-developed subcenters to provide jobs, housing, and economic opportunities with reduced soil and air pollution. It comprises sequenced investments, municipal reforms, and capacity building (policy, planning, and monitoring), with four strategic objectives: (i) expand roads and basic urban services (water, sewerage, and heating) within subcenters and improve connectivity to initiate land use transformation; (ii) increase economic and public services through investments in socioeconomic facilities to meet population needs, increase urban functions, and encourage job creation; (iii) increase service provider efficiency by improving water supply, sewerage, and heating service operations; and (iv) strengthen institutions and capacity by improving urban planning and subcenter development, community awareness, participation and empowerment, service provider operations and management, and program implementation capacity. The purpose of the QUARTERLY AND MID TERM REVIEW PROGRESS REPORT is to provide a brief summary of work undertaken and progress against activity plan/s: Main actions for next quarter Record of meetings held Advise on the input and activity plan and work undertaken this quarter; Tranche 2 progress feasibility study and signed MOU Confirm the final project work plan and arrangements; and Document issues and constraints arising Report on the agreements reached at the mid-term review in February 2016 The Mid-Term review mission (MTMR) was led by the ADB Staff for Tranche1 from 14 to 23 February. The tentative agenda was: 13 February: ADB team arrives in UB 14 February morning: MTMR kick-off meeting From 14 Feb afternoon to 16 Feb Morning: working groups were formed for each safeguard and due diligence review 17 Feb morning: ADB internal wrap-up 17 Feb afternoon to 20 Feb: contribution of everybody to the draft MOU. Safeguard team fly back to Manila on 17 Feb late afternoon 21 Feb to 22 Feb: Finalization/translation of MOU and pending issues 23 Feb Morning: Wrap-up meeting The MTMR was an important mission. It assessed whether the project s immediate objectives are still attainable in terms of the design and monitoring framework. The mission work included detailed: review of institutional, administrative, organizational, technical, environmental, social, economic, and financial aspects of the project based on the assumptions and risks included in the design and monitoring framework; 6

7 review of covenants and FFA undertaking to assess whether they are still relevant or need to be changed, or waived due to changing circumstances; updating the project s design and monitoring framework, SDAP and GAD, where restructuring or reformulation is necessary or its immediate objectives will change, Review of the procurement plan, baseline projections, project implementation timing, and if necessary the processing of change in scope. The MTMR should have been fielded later (around August/September) but during ADB management review meeting the VP requested to carry-out the MTRM before the submission of Tranche 2 for President s approval (by March 2017). The mission MOU and outcome will be linked to Tranche 2 processing. All available experts, national and International, from Egis, Dohwa/Monconsult, UN Habitat and IPE were requested to participate. From the consultant teams EGIS led the MTMR. Working groups for each safeguard and due diligence activity were set-up with a focal point. ADB experts worked directly with each working group members. The tentative groups were: Resettlement Social, gender and community engagement Environment Project cost, Economy and Finance Project scope, technical/engineer Procurement and baseline projection for contract award and disbursement DMF, Loan covenant, and FFA undertaking/road map Subcenter development and planning Reports, presentations, procurement plans and documents were provided for respective meetings with detailed description of the current project components and progress related to the items mentioned above. The updated documents are attached in Appendices 1-8 in this report. 7

8 EXECUTIVE SUMMARY The program approach aims to initiate a redevelopment process in ger areas. Improving infrastructure within the ger area subcenters and connectivity with the city core center is critical for inclusiveness and important to facilitate the movement of people and goods, develop urban corridors, and create clusters of subcenters. Better urban planning combined with a network of infrastructure along priority roads will initiate a structural change of subcenter urban fabric. This will (i) improve residents access to basic urban services, public space, and socioeconomic facilities; (ii) support local economic development; (iii) allow residents and businesses to take advantage of urban economies; and (iv) provide better housing options. The changes in land use and higher urban density will improve water, sanitation, and heating services delivery. A snap shot of major activities and progress in 4 th Quarter 2016 and up to end of February 2017 are summarized as follows: The Project was approved by ADB on 17 Dec 2013, signed on 30 Jun 2014 and became effective on 24 Sep 2014 Implementation activities started in Q when the design of the sewer collector mains was started for the two target subcenters Selbe and Bayankhoshuu Work to date has been dominated by the recruitment of four consulting firms and in fast tracking the inception phase and mobilization of respective consultants A total of 4 contracts have been awarded, including (i) for Detailed Design and Implementation Supervision (Dohwa Engineering Co. Ltd), (ii) Program Management Support Services (Egis International), (iii) Improved Subcenter Planning and Development (IPE Global) and (iv) Community Engagement, and SME Support (UN Habitat) Expression of interest have been advertised for Consulting Services CS5 Preparation of detailed design for Tranche 1 subprojects is progressing and procurement through international and national competitive bidding (NCB) commenced in July 2016 and will continue in Draft Procurement and Financial Manuals were completed for PMO use Procurement risk mitigation matrix prepared Procurement plan revised based on scoping of procurement packages recommended by detailed design consultants 22 August 2016 Procurement plan revised in February 2017 based on the ADB mid-term review and based on procurement packages recommended by detailed design consultants and PMO Initial safeguard trainings completed for environment, resettlement, social and gender issues TORs for DMS survey and recruitment of IT firm for financial management automation completed Detailed resettlement plans in progress Financial and accounting system development completed. Implementation to start in February Bidding period for WWOI closed on 16 June 2016, bid evaluation completed and contract awarded in October 2016 Bidding documents for bridges, flood protection, facilities and heating plants under drafting pending completion of detailed design, specifications, BoQ, etc. Bids for bridges and affordable housing pilot project advertised 1 st Quarter 2017 Bid evaluation for Selbe heating plant completed and submitted to ADB for no objection KEY ISSUES AND PROPOSED ACTIONS - TRANCHE 1 (As discussed during the ADB Mid-Term Review Mission in February 2017) 1. Resettlement. MUB decision on the baseline value for compensation per square meter of land is urgent. Without this, resettlement activities cannot progress and implementation will be delayed. It is suggested that MUB agree on 1m 2 land baseline price between MNT 80, ,000. The land acquisition and resettlement (LAR) impact and scope for additional road sections for Selbe and Bayankhoshuu subcenters needs to be determined based on the final detailed technical design. Thus, EGIS (the program management support services consulting team) should prepare the land acquisition and resettlement plans (LARPs) for the remaining areas of Tranche 1. This work should be coordinated with the detailed technical design work for the remaining areas of Selbe and Bayankhoshuu subcenters. 8

9 2. Environment. The following should be undertaken: (i) urgent update of the design parameters of water supply, sewerage, road, and heating system for Bayankhoshuu and Selbe subcenters as per detailed layout plan is required to update the environmental management plan (EMP) after receiving all updated layout maps and design parameters for various components of Project 1; (ii) EARF and EMP: Tranche 1 project implementation consultants will update EARF and EMP and submit it to ADB by August 2016 (prior to factfinding mission for Tranche 2); (iii) Grievance redress mechanism (GRM): review the GRM in place to adjust it as needed, and to document it in the updated EARF, including the complaints that were filed, related mainly to resettlement; (iv) Environmental Monitoring: the PMO informed that monitoring obligation will be delegated to contractors (which shall hire monitoring entity), and therefore, provisional item will need to be included in bidding documents; and (v) EMP update: after completion of the final layout of the project detailed design, the EMP will be updated by EGIS. 3. Social. Coordination between the PMO, EGIS, IPE Global, and UN Habitat in terms of social due diligences and community participation-related activities should be improved. The PMO, supported by EGIS, will review the progress of implementation of social, community participation, and gender action plans; and prepare a social monitoring report to be submitted to ADB by mid-july Approval process. The MUB approval process should be simplified and shortened (some approval process could be done in parallel). Kindergartens and business incubators are ready to be tendered for more than one month but approval to start the tender process has not been received. Advance review of bidding documents by ADB before detailed design is submitted to state expertise may be considered. 5. Revised Procurement Plan. The PMO requested to revise the Procurement Plan due to changes in the design. NCB procurement method will be introduced. The PMO has to submit 2 3 contracts of similar nature. The revised Procurement Plan needs to be approved by ADB as soon as possible as most of the bidding packages will be advertised in Q Audit Report. In order to comply with the loan covenants, the Mission requested the PMO to submit the 2014 audit report for MUB as soon as possible. The PMO was also reminded to submit the 2014/2015 audit report for the project by end-june Contract variation. Dohwa will submit a variation request, which should be processed on time to allow the design team to make the final adjustments to the design and start the tendering process. Variation approval should be finalized by end-june 2016 so that the design team can mobilized on 1 July While making the final adjustment in the project detailed design, the consultant team should pay a special attention in making the design as flexible as possible to provide access opportunity to a maximum of residents and calibrate the services supply based on average demand by block to allow a maximum adaptability of the system and to adapt to the future organic and redevelopment process. Impact Improved living conditions in Ulaanbaatar 9

10 PROJECT LOCATION MAP BAYANKHOSHUU Subcenter SELBE Subcenter 10

11 Project Management Arrangements A. Project Implementation Organizations Roles and Responsibilities Management Roles and Responsibilities Asian Development Bank (ADB) The Government Program Steering Committee Executing Agency Municipality of Ulaanbaatar (MUB) Implementing Agency Municipality of Ulaanbaatar (MUB) Oversees the implementation, including compliance by executing and implementing agencies of their obligations and responsibilities for project implementation in accordance with ADB's policies and procedures. The Borrower s representative Ensures that the MUB provides timely counterpart funding. Screens and approves withdrawal applications. Establish three imprest accounts (for loans and grant funds, respectively) in a Commercial bank acceptable to ADB. Ensures annual audit of the project accounts. Negotiates project and loan agreements. Chaired by the Mayor of Ulaanbaatar Comprise representatives of the Ministry of Economic Development, Ministry of Finance, Ministry of Construction and Urban Development, Ministry of Labor, Ministry of Education, and other agencies concerned, as needed. Oversees progress on the Investment program. Provides strategic guidance on program implementation. Meet at least once every 6 months until program completion. Responsible for program oversight and administration. Sets up multimodal coordination committee and follow up the action plan. Oversees implementation of investment program road maps. Submits progress reports to the steering committee for decisionmaking. Prepares subsequent tranches. Be accountable and responsible for proper use of advances to the imprest accounts. Endorses withdrawal applications. Ensures compliance with project covenants. Hold quarterly meetings with the program management office. Responsible for implementation of the program, including finance and administration, technical and procurement matters, monitoring and evaluation, and safeguards compliance. 11

12 Program Management Office, and Procurement Committee Responsible for program implementation and management. Establishes and maintain program performance management system. Manages detailed surveys, investigations and engineering designs for all subcomponents. Prepares/update and submits final resettlement plans and updated EMP for ADB approval prior to award of contracts and implements all necessary documents related to land acquisition and resettlement, environmental, and other social safeguards. Secures technical and ecological expertise for all civil works prior to bidding. Assists the MUB in procurement and management of works, goods supply, and consulting services contracts (with support from relevant municipal bodies). Ensures monitoring and quality control of construction works with necessary safety measures. Coordinates with ADB on matters related to disbursements, including preparation of withdrawal/replenishment applications for endorsement by the MUB and the Ministry of Finance, and retaining of supporting documents. Submits progress reports and audit reports, to ADB and the MUB on time. Maintains the program imprest accounts. Submits the withdrawal application to ADB, collect and keep supporting documents, submit reporting requirements, including the annual report and financial statements. SOURCE: FAM B. Key Persons Involved in Implementation Municipality of Ulaanbaatar(MUB) Municipality of Ulaanbaatar (MUB) Mr. Batbold S. Governor of the Capital City and Mayor of Ulaanbaatar Jigjidav Street -9 Ulaanbaatar Mongolia Municipality of Ulaanbaatar(MUB) ADB Urban and Social Sectors Division (EASS) Mission Leader Mr. Batkhuu Head of Project and Cooperation Dept. Mayor s Office batkhuu@gmail.com Mr. Diwesh Sharan Director Tel.: Fax: dsharan@adb.org Mr. Arnaud Heckmann Urban Development Specialist Mongolia Resident Mission ICC Tower, 17th Floor, Jamyan Gunii Street-9, Ulaanbaatar 14210, Mongolia Tel.: /323507/ Fax: aheckmann@adb.org 12

13 PMO Project Management Office Ulaanbaatar Urban Services and Ger Areas Development Investment Program Consultants Mr. Avirmed D Acting Project Coordinator Room #408, Central Cultural Palace Amar Street 2, BagaToiruu 1 Sukhbaatar District, 8th khoroo Ulaanbaatar, Mongolia Tel.: Mobile: avirmed@ub-subcenter.mn 1. Dohwa Engineering / KDH / MonConsult 2. Egis international in JV with Egis Eau and Subconsultants Egis Tiin Mongolia & Inter Consulting Group 3. UN Habitat 4. IPE Global C. Project Organization Structure Figure 1: Program Organizational Structure Asian Development Bank (ADB) The Government Program Steering Committee Executing Agency MUB Implementing Agency MUB Program Management Office (PMO) Stakeholders Consultants 13

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16 A. The Project A.1 Background Strategic context and sector policy. In February 2013, Parliament approved the Adjustments to the Ulaanbaatar City Urban Development Master Plan 2020 and Development Directions The master plan produced two important outcomes: (i) integration of ger area development into the city master plan, and (ii) acknowledgement of the value and function of ger area subcenters as key elements of future city growth. The MUB is developing the Ger Area Development Program and established a Ger Area Development Agency, supervised by the vice mayor in charge of urban development and investment. On 30 May 2013, the city council resolution No.10/38 endorsed the program, subcenter locations under project 1, and coordination of the investment program with the city master plan. The MUB proposed a special purpose development vehicle (subcenter redevelopment authority) to facilitate, supervise, and coordinate the redevelopment process of the selected subcenters. In addition, the Ministry of Economic Development's Street Project is to improve road conditions in Ulaanbaatar and includes a ger area component. The National Development Strategy and the New Reconstruction Midterm Program ( ) constitute the national framework for program implementation. The program is consistent with the Asian Development Bank (ADB) country partnership strategy, for Mongolia; ADB's Strategy 2020 priorities, including environmental sustainability and private sector development; as well as the core themes of green, competitive, and inclusive cities of ADB's Urban Operational Plan. Policy dialogue and capacity development. To supplement the strong policy framework, policy dialogue and capacity development will focus (i) in communities, on community participation, awareness, and empowerment, including design and implementation of the social and gender action plan; and establishment of community development councils (CDCs) and small- and medium-sized enterprise (SME) development councils (SDCs); (ii) in subcenters, on subcenter upgrading, including technical guidance for preparing and implementing local development plans, urban zoning regulation and construction standards, and a development framework with a transparent mechanism to regulate land redevelopment insuring current residents are integrated in the redevelopment plan; and (iii) in the city, on the master plan through ongoing ADB technical assistance to strengthen urban planning capacity. Capacity development for water and wastewater utilities will target (i) improving the MUB and USUG management contract, (ii) defining a clearer tariff road map, and (iii) providing technical support to the Water and Sewerage Regulatory Commission. For heating, the focus will be to ensure financial sustainability and capacity of new and existing heating facilities operators in the selected subcenters and to strengthen provisions in management contracts. Financing modality. An MFF is the proposed financing modality to promote a long-term partnership between ADB, the government, and the MUB to facilitate the development of sustainable, inclusive, and livable ger areas. The MFF will support the policy framework for the redevelopment of ger areas, and provide opportunities for constructive dialogue and capacity development on city planning, policy reforms, and physical and nonphysical investments. It will generate critical mass, predictability, and continuity for basic urban services provision in ger areas, and enable ADB to better respond to MUB needs. Development coordination. In preparing the program, ADB coordinated closely with development partners involved in Ulaanbaatar's urban sector. Three ADB-financed projects will directly support the program: (i) a bus rapid transit line from the city center to Selbe subcenter; (ii) support for housing and micro-, small-, and medium-sized enterprise financing in ger areas targeted by the program; and (iii) capacity development technical assistance to strengthen MUB urban planning capacity. 16

17 A.2 Project Impact and Outcome Project Outcome Description of Outcome A network of livable, competitive, and inclusive subcenters in Ulaanbaatar's ger (yurt or traditional tents) areas Progress Toward Outcome: The loan and grant projects under MFF 0078 were approved on 17 Dec 2013 and became effective on 24 Sep The EIB loan and project agreements for Tranche 1 were signed and disbursement conditions are completed. The feasibility study for Tranche 2 commenced in February 2016 and is expected to be ready for approval by the ADB Board by Q The ADB fielded a Mission to Ulaanbaatar, Mongolia, on June 2016 for the Ulaanbaatar Urban Services and Ger Areas Development Investment Program review for Tranche 1 and interim for Tranche 2. The objectives of the Mission were to (i) review the implementation progress of Tranche 1 specifically regarding environmental aspects, gender action plan implementation, and project related other social dimensions; and (ii) provide guidance on the (a) overall next steps of the Tranche 1 implementation and on preparation of social monitoring report for Tranche 1 components; (b) steps for the preparation of Periodic Financing Request (PFR) for Tranche 2, including linked documents, that should be submitted to ADB by July The Mission conducted trainings on ADB social due diligence, project approval social requirements and documents, and on ADB SPS and LARP implementation. A site visit to Denjiin Market area was organized on 15 June A wrap-up meeting to discuss key issues for both tranches was held on 17 June A City Board Administration Council was held on 20 June 2016 to decide on the key issues raised by the wrap-up meeting. ADB s Memorandum of Understanding (MOU) summarizes the discussions and issues identified during the meetings. The agreements reached as set out in this MOU are subject to approval of ADB Management and the government. The MOU was finally signed 14 October 2016 and is attached in Appendix 7 for reference. Status of compliance with loan covenants. The Mission reviewed the status of compliance with loan covenants under Project 1, which are summarized in Appendix 6. All the covenants that are relevant at this stage of implementation are being complied with including submission of the 2014 audit report of MUB, which was requested by the ADB. Change in scope and procurement plan. Based on the engineering detailed design the procurement plan has been updated (see Appendix 2). Because the initial procurement plan was only formed by ICB packages, Tranche 1 loan agreements were not referring to NCB procurement method. The increases of ICB thresholds for Mongolia, in 2015, means that 10 packages, for an overall value of $19.6 million, are eligible to be procured using NCB method. List of NCB packages are indicated in the updated procurement plan in Appendix 2. Domestic market analysis demonstrate that national companies and the MUB have enough capacity to implement those packages. Tranche 1 loan agreements should be modified to mention NCB as procurement method for Tranche 1 and eligible packages are procured using NCB method. During the Mid-Term Review In February 2017 the procurement plan was revised further on justifications provided by the PMO and Engineers. Based on the engineering detailed design the procurement plan has been updated (see Appendix 2). 17

18 Approval process Tranche 2: The ADB Mission and the Government agreed to the following actions and timelines to support further processing of the proposed MFF: Milestones Expected Date MUB/MOF submits Tranche 2 PFR to ADB 17 October 2016 Submission of PFR report 20 October 2016 Management review meeting 29 November 2016 Circulation for comments of the PFR and loan and project agreements to Ministries 5 December 2016 Cabinet no-objection for loan negotiation 10 January 2017 Loan negotiations Feb 2017 Tranche 2 approval by MOF Minister and ADB President March 2017 Loan signing March 2017 Loan effectiveness June 2017 ADB = Asian Development Bank, MOF = Ministry of Finance, MUB = Municipality of Ulaanbaatar, PFR = periodic financing request. Source: Asian Development Bank. 18

19 V. KEY ISSUES AND PROPOSED ACTIONS Implementation Progress Description of Project Outputs: 1. Roads and urban services are expanded within the targeted subcenters and connectivity between subcenters is improved 2. Economic and public services in subcenters are improved 3. Service providers become more efficient 4. Institutions and capacity for urban development, program management, and service delivery are strengthened: i. Subcenter development and community engagement ii. Operations and management of service providers improved iii. Strengthened program implementation capacity Status of Implementation Progress (Outputs, Activities, and Issues) Implementation of Tranche 1 is ongoing. Four out of five consulting firm service packages (detailed design sewerage collector mains, program management support, community engagement and SME development, and urban planning and subcenter development) were awarded and consultants were mobilized accordingly. Three civil works contracts financed by EIB for the construction of sewerage network collectors for Bayankhoshuu and Selbe subcenters are in advanced stage of physical completion. The bidding documents and tendering completed for USUG design, supply and installation of water supply and wastewater treatment equipment (Package WWOI). Contract award scheduled October Selbe heating plant was advertised and bid evaluation is under progress. Bidding documents for several priority packages are under preparation and due to be advertised soon. A.3 Project Outcome Description of Outcome: A network of livable, competitive, and inclusive subcenters in Ulaanbaatar's ger areas Description of Project Outputs: Roads and urban services are expanded within the targeted subcenters and connectivity between subcenters is improved Economic and public services in subcenters are improved Service providers become more efficient Institutional strengthening and capacity building Subcenter development and community engagement Operations and management of service providers improved Strengthened program implementation capacity 19

20 Source of Funding Loan/Grant Fund US$ Amount million 1 Grant 0380-MON: Ulaanbaatar Urban Services and Ger Areas Development Investment Program - Tranche 1 Urban Environmental Infrastructure Fund-UFPF Multi Loan 3098-MON: Ulaanbaatar Urban Services and Ger Areas Development Investment Program - Tranche 1 3 Loan 3099-MON: Ulaanbaatar Urban Services and Ger Areas Development Investment Program - Tranche 1 4 Loan: Ulaanbaatar Urban Services and Ger Areas Development Investment Program - Tranche 1 5 Loan: Ulaanbaatar Urban Services and Ger Areas Development Investment Program - Tranche 1 Ordinary capital resources Asian Development Fund European Investment Bank Municipality of Ulaanbaatar

21 B. Project Implementation Status B.1 Updated Project Implementation Schedule Please see Appendix 3 for the latest Project Implementation Schedule. B.2 Performance Monitoring System (PPMS) Develop and implement Project performance management system On approval of the Contract Variation 1 for Egis, the ADB s Project Performance Management System (PPMS) was adopted in carrying out this component of the Consultancy. The ADB s PPMS aims to contribute to improved project performance, and is part of ADB s accountability framework. Use of the PPMS during implementation will provide early warning to Project Director and others of emerging problems that require corrective action. The PPMS will comprise five components (i) Project (Logical) Framework; (ii) Project Performance Report; (iii) Monitoring and Evaluation Report (at central, and executing and implementing agency levels); (iv) Project Completion Report; and, (v) Project Performance Audit Report and Impact Evaluation Study this is outside the Consultant s scope of work. It has two functions. First, it is a design tool for improving quality at Project start. Its use aims to ensure a consequential relationship between Inputs, Activities, Outputs, Purpose, and Goal. This will also help develop stakeholder understanding and ownership of the Project. Second, it provides the basis upon which the PPMS operates by establishing quantified and time bound targets and measurable indicators, and identifying key risks and assumptions that are used to monitor and evaluate performance in the PPR and PCR, and PPAR. Given this, preparation of a quality Project Framework is critical. Develop Relevant Database for PPMS The PPMS requires information to be collected to calculate the performance indicators. The indicators will include: Financial data Sociological and demographical data (population, gender ) Economic data Traffic data (volume, nature, safety ) Environmental data The Consultant will prepare a detailed description of the information to be collected, which will include: The type / name of information to be collected The frequency of collection The type of collection (primary / secondary) The location of surveys points. The organization in charge of collection (government agency, supervision consultant ) The above will be simply computerized in the form of a database to allow sorting out and monitoring of this information, which will provide the status of the PPMS. Standard formats and tools will be developed for the use of all concerned parties to allow an easy integration of all information and a simple reporting. Carry out necessary Surveys to update the databases The implementation of PPMS includes baseline data establishment and survey, and regular monitoring surveys as required. Surveys will be performed by the agencies in charge, and the supervision consultants. Arrangements for monitoring and evaluation shall continue to be monitored by the Client after Project completion. 21

22 The Consultant will finalize the data collection plan in accordance with the requirements of the PPMS and of the ADB s guidelines. This plan will mention the location, type, frequency of collection for each data, to ensure a proper monitoring of the indicators. Should any other agency / organization be required to perform surveys for example for environmental aspects (noise, water and air quality) this would be contracted out; the Management Consultant would assist the PMO in preparing the Terms of Reference and specifications for the same. Quarterly update performance indicator framework The PMO and Consultant will review these indicators every quarter and include in the quarterly report. This will be done through the consideration of the latest results of data collection / surveys. The data collection plan mentioned above will be adjusted every quarter in order to reflect the progress of the works and operation (opening of sections to traffic, start or completion of works at a given location).this will be reported. Management Information System Accurate, timely, and relevant information is essential to the decision-making process of the Project, PMO needs to rely on an adequate information system to ensure that Project information needs could be obtained accurately, easily and quickly. Information needs means information in order to adequately plan, organize, and control the Project; information to share with other stakeholders; information about other projects that interface with the Project; information in order to coordinate and monitor Project activities; information suitable for decision-making (cost, variation, risk, work progress, etc.); information to monitor and evaluate Project performance; and others. The development of the MIS would be done once the management processes and procedures are defined. This will enable the MIS functionality to be defined in terms of the following basic objectives (among others): To enable the PMO to identify and isolate sources of significant variances and determine the reason in the event the Project deviated from the plan; To allow the PMO to track the real-time status of work packages in order to determine the completed works and the works that are still pending; To help the PMO manage Project schedules by providing the basis for work package resource allocation and work timing; To help the PMO to forecast the impact of certain risks on time, costs, and quality baselines; To give PMO the insights into what revisions to the baselines should be implemented, when to implement these revisions, and why implement these revisions; To enable the PMO to integrate with the work breakdown structure, which provides the capability to report status (physical and financial) of the work packages throughout the Project s life cycle; To assist the PMO to assemble monitoring and evaluation data and statistics; and, To support reporting and communication procedures defined for the Project. Reporting The Consultant proposes to adopt on the whole project a standard format to make the compilation and consolidation processes easier. This format will be discussed with the PMO, and then shared with the detailed engineering design, tendering and construction supervision Consultant (package 1) and other packages stakeholders. The Consultant will agree with the Client, during the Inception phase, the format, content and date for the delivery of these periodic reports. A procedure will be set up to ensure the delivery of the reports to the concerned parties (as agreed with the PMO) on the given date, without delay and with the required level of accuracy and reliability. 22

23 Every quarter, a specific report will be prepared by the Consultant. It will present a summary status of the various contracts (schedule, budget, actual and/or potential problems and delays). The reports shall be submitted within 30 days of the end of the report period (the exact date will be agreed with the Client). The Consultant will depend on the Package 1 Consultant for the provision of basic information. Contract Management The Consultant will assist the PMO in reviewing and certifying the contractors claims for payments These claims will be assessed, using the report submitted by the Engineers and propose a different recommendation if needed. Decisions will be proposed in a way to: be in accordance with the contracts and regulations be in line with former decisions be fair to all parties, and support and make the project implementation faster (i.e. demonstrate flexibility when it is possible and required) 23

24 C. Project Management Information System (MIS) The status: MIS is in the planning and set up stage and an initial architecture outline was developed during June 2016 by CS2. The MIS will be developed further as per the project needs. The UB- Subcenter website will be enhanced further to provide project details during the next two quarters. PMO has recruited M&E Specialist to continually monitor and update the project schedules. 24

25 D. Procurement D.1 Procurement Assistance Prepare Tender Documents The Consultant will prepare Bidding Documents in accordance with the revised procurement plans and detailed designs and will in general follow: ADB Project Procurement Plan defined in the Project Administration Manual, November 2013 ; ADB Procurement Guidelines, March 2013; ADB Standard Bidding Document, User s Guide Procurement of Plant-Design, Supply, Install, 2015; ADB Standard Bidding Documents for procurement of Works of 2015 or for procurement of Works - Small Contracts, 2015, and FIDIC Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer, Multilateral Development Bank Harmonized, Edition The procedure and main steps of bidding activities will be based on the Project Procurement Plan and details will be defined with PMO (e.g. scheduling, ICB, NCB or Shopping, with or without prequalification) prior to the preparation of the bidding documents. Once the procurement method approved, the Consultant will prepare the necessary documents (i) Instructions to Bidders, (ii) Bid Data sheet, (iii) Evaluation criteria; (iv)bidding Forms, (v) Standard Specifications; (vi) General Conditions of Contract; (vii) Particular Conditions of Contract; (viii) Contract Forms Technical Specifications, Drawings and Bill of Quantities will be delivered by the CS1 Consultant. D.2 Updated and Revised Procurement Plan The Procurement Plan Contract Packaging drafted 22 August 2016 formed the basis of the revised procurement plan in accordance with the detailed design packages and the change of scope in phasing the works recommended by CS1 consultants and agreed by the PMO and ADB. The PP was updated revised during the Mid-Term Review Mission February 2017 based on justifications provided by the MUB-PMO. Revised Procurement Plan. The PMO requested to revise the Procurement Plan due to changes in the design. Phasing of works, recommendations of CS1, resettlement issues, NCB procurement method affected the procurement plan. The revised Procurement Plan was approved by the ADB February 2017 and is attached here in Appendix 2. SUMMARY OF PROCUREMENT Procurement items Total ICB NCB Status of tendering numbers Finished Started Not Started Plants Civil Works Total

26 SUMMARY OF STATUS OF PACKAGES Tranche 1 Total Summary As of 2016 At the end of Phase 1 Number of packages completed 0 19 Plants - 3 Civil Works - 16 Number of packages awarded and in progress 4 - Plants 1 - Civil Works 3 - Number of packages under evaluation and to be awarded 1 - Plants 1 - Civil Works - - Number of packages IFB advertised 1 Plants - Civil Works 1 Number of packages under design in progress or to be tendered 13 - shortly Plants 1 Civil Works 12 Total packages Main outputs of tendering within the reporting period for Q are: 1) ICB for WWOI: Design, engineering, supply and installation of Pumping stations, water and wastewater treatment plants: Overall procurement tasks beginning from preparation of Bidding documents, clarification to ADB comments, bid advertising, prebid meeting, clarification to bidders and bid opening to bid evaluation, bid clarification requests to bidders, contract negotiation and contract award was carried out; 2) ICB for SHF06: Heating Plant in Selbe Sub-center: Overall procurement tasks beginning from preparation of Bidding documents, clarification to ADB comments, bid advertising, clarification to bidders and bid opening to bid evaluation and bid clarification requests to bidders was carried out; 3) NCB for SBR08: Three Bridges in n Selbe Sub-center: Overall procurement support including preparation of Bidding documents, clarification to ADB comments and bid advertising was carried out; 4) NCB for AAHURP-PP01: Detailed Design and Construction of an Affordable Housing Pilot Project in Selbe Sub-Centre, Chingeltei Street Khoroo 18: prepared the first package of bidding documents along with clarification to ADB comments and submitted to ADB for their approval. 5) Capacity building training and workshops were conducted on following subjects; ADB s Standard Bidding Documents: Section 3: Evaluation and Qualification Criteria to PMO; ADB s Standard Bidding Documents: Section 6 - Employer s Requirement to PMO; and Bid Evaluation Workshop to Evaluation Committee members of packages WWOI and SBR08. 26

27 Capacity building workshops on Bid assessment and Bid evaluation procedures were conducted on need basis to the ad-hoc Evaluation committee members. 6) Project Procurement Risk Assessment Questionnaire and Check-list of potential risks in Procurement was prepared and the assessment was furnished to the ADB. 7) NCB for BSLS09: Landscaping in Selbe and Bayankhoshuu Sub-centers: First package of bidding documents prepared and submitted to PMO for their review prior to seeking ADB s approval. 8) EIB Financed Packages: Revised Standard Bidding Documents for EIB packages was sent to the EIB for their approval. Main outputs of tendering within the reporting period for Q are: 1) NCB for BSF05: Works for Kindergarten, Business Incubator and Vocational Training Center in Bayankhoshuu Sub-center: First package of bidding documents was prepared the submitted to the ADB for their review and approval. 2) NCB for SSF05: Works for Kindergarten, Business Incubator and Vocational Training Center in Selbe Sub-center: First package of bidding documents was prepared the submitted to the ADB for their review and approval. 3) ICB for SHF06: Heating Plant in Selbe Sub-center: The Bid evaluation was carried out and the Bid Evaluation Report along with Contract award recommendation sent to the ADB for their approval; 4) NCB for AAHURP-PP01: Detailed Design and Construction of an Affordable Housing Pilot Project in Selbe Sub-Centre, Chingeltei Street Khoroo 18: The IFB was advertised on 21 February

28 E. Contract Management The contract management system will be started soon and future reporting will follow the format shown below. A full contract management system will be started this quarter and will follow the headings listed below. E.1 Bayankhoshuu Subcenter Subproject Package No E.2 Selbe Subcenter Subproject Package No E.3 Water and Wastewater Operation Improvement Subproject Package No. WWOI E.4 Consulting Services Packages General Description Contract value (in US$) Advert. date Contract Award Comments Detailed Design Eng. Services CSDD Design, tendering, and construction supervision and feasibility study preparation for project 1, QCBS (90:10) CSPM Detailed design sewerage collector mains, 9 IC Program Management Support Services Strengthened program for PMO, QCBS (90:10) 4,024, May , th Quarter ,237, June 2015 Dohwa Engineering Co. Ltd JV awarded the contract 9 ICs Selected and completed the services 1st Quarter 2015 Egis International JV awarded the contract PMST Program management office staff 11 IC 750, Dec PMO Staff Engaged. Subcenter Development and Community Engagement Support CSSP Improved subcenter planning and 799, Aug development, QCBS (90:10) 2015 CSCC Community engagement, QBS 699, Jun 2015 IPE Global & Associates awarded the contract UN Habitat awarded the contract Improved Operation and Maintenance of Service Providers CSOI Support to the service delivery 500, nd Q 2017 Advertised. organizations USUG, OSNAAG, kantors, and heat-only boiler operators to improve the management of the services QCBS (90:10) Closing 28 Feb Evaluation of EOI in March Please see specific Quarterly Reports submitted by each consultant attached in Appendix 5. 28

29 F. Financial Management and Project Accountings F.1 Financial Management System and Support Financial Accounting and control systems The Consultant CS2 is assisting the Implementing Agency in establishing, testing and reviewing financial accounting and control systems. The system will provide for the necessary accounting procedures throughout project implementation and will be as simple as possible for its easy use. The system will be designed and installed in a manner that can be readily converted for use during implementation and will be operational when the project starts, and can be expanded, if necessary, as the demands on it increase. The "Financial management systems" covers the policies and practices regarding financial planning, programming, accounting, monitoring and reporting, internal auditing, checking and controlling, external auditing, funding, organization, and personnel of a project. Good financial management promotes overall fiscal discipline and efficient allocation of resources to priority needs. The project accounts and related financial statements will be audited annually in accordance with sound auditing standards by auditors acceptable to ADB. The Government will submit annual audited reports and related financial statements to ADB within 6 months after the end of each fiscal year Financial Performance Indicators Financial performance indicators will be identified and implemented, to assess and monitor the project's financial sustainability, the financial viability of the executing agency, and the project's impact on the borrower's fiscal balance. Financial Reports to ADB: The Consultant will assist the PMO in preparing financial reports for the ADB for proper fund flow during the implementation of the project. These reports will be detailed and submitted timely. F.2 Project Costs 9. Investment and Financing Plans. The total cost of the program is $320 million. For the program, the government has requested an MFF of up to $ million from a blend of ADB's Asian Development Fund (ADF), ordinary capital resources (OCR), ADB s trust funds, and other cofinancing. It is expected that the Municipality of Ulaanbaatar (MUB) will finance $96 million, or 30% of the total cost, including taxes and duties, resettlement, and other miscellaneous costs. Cofinancing which is estimated at $60.3 million equivalent may be provided as loans or grants. The European Investment Bank will provide a parallel cofinancing up to 50 million for financing water supply and sanitation subprojects of the program. 10. The total cost of Tranche 1 is $ million, inclusive of physical and price contingencies, interest, taxes and duties, and other charges. ADB financing is $53.70 million, consisting of about $22.5 million from ADF, $27.5 million from OCR, and $3.7 million as a grant from the Urban Environmental Infrastructure Fund. The total MUB financing is $22.44 million, and the European Investment Bank (EIB) is cofinancing a total of $28.38 million. Table 1: Investment Program ($ million) Item Investment Program Tranche 1 A. Base Cost a 1. Expanded roads and urban services 1.1 Roads improvement Water supply system improvement Sewerage system improvement Heating services expansion Subtotal (1)